Ethereum Surges Past $2,000 Amid Falling Open Interest
Ethereum has surged past the $2,000 mark following a softer-than-anticipated US CPI report, prompting traders and analysts to discuss whether the worst is over for the cryptocurrency or if this is merely a fleeting relief rally. Recent reports indicate that futures open interest has experienced a significant decline over the past 30 days. Funding rates have dipped into deeply negative territory, while certain on-chain metrics suggest a clustered support zone exists beneath current price levels. It is reported that the striking figure of an 80 million ETH drop in open interest across major venues has caught the spotlight. If we consider that figure literally, it would represent a significant amount. It indicates that substantial positions were liquidated instead of new ones being established.
However, the magnitude of the transformation also raises questions; inaccuracies in reporting or dollar-value comparisons mistakenly identified as ETH can occur. A notable reduction in futures exposure has been recorded on exchanges such as Binance, Gate, Bybit, and OKX, and this trend seems to be genuine. Funding rates on certain platforms are reaching heights not observed in approximately three years. When traders incur costs to maintain short positions, it indicates a robust bearish sentiment. Reports indicate that these extremes often precede a swift reversal, as the crowd can become overly one-sided, resulting in a rapid shift when market sentiment alters.
This phenomenon was observed at the close of 2022, characterized by intense shorting that was swiftly followed by a rapid reversal. This does not imply that it will occur this time, as markets can stay one-sided for extended periods beyond what one might anticipate. According to data, there exists a notable cost-basis zone ranging from $1,880 to $1,900, encompassing approximately 1.3 million ETH that was traded. The $2,000 level serves as a psychological anchor, bolstered by the presence of moving average clusters. A breakout from the recent falling wedge pattern indicates an initial measured target around $2,150, a level that is likely to be tested before encountering higher resistance at approximately $2,260 and subsequently $2,500. The levels in question are not guaranteed; the overall market sentiment and Bitcoin’s trajectory will play a crucial role in determining if they are achieved.
Currently, the decrease in open interest mitigates the risk of cascade liquidations, potentially stabilizing intraday volatility. Simultaneously, the low funding rates indicate that bearish positions remain in play and could face a squeeze if the momentum shifts. Recent reports indicate that accumulation wallets have seen increased inflows during price dips, suggesting a longer-term conviction among certain investors.
